Economic growth is the focus of every city. Through economies of scale cities such as Chicago and New York continue to experience great economic expansion. Continued growth, however, opens up the gateway for urban sprawl and the lack of a centralized economy. As cities expand their land use people disregard once thriving centers of industry and business and locate next to newly developed “Greenfield” type businesses. Often times the only thing left in the wake are rundown, abandoned business districts. In an effort to revitalize these deserted areas, councils in charge of economic development will use many different policies. An occasionally controversial policy is called a TIF or Tax Increment Financing.Tax Increment Financing is the use of tax revenue generated by a designated section of the city towards the development or redevelopment of the same section of that city. From a public policy perspective, TIF programs encourage cities, towns, and counties to initiate development projects that might not have been undertaken (Huddleston 1982). TIFs are gaining in acceptance and in use, yet they find opposition almost as much. As a basis for reference, a background on the perceived positive and negative aspects of Tax Increment Financing will be discussed; followed by examples of real instances involving the implementation of this policy.Positive AspectsThe growing popularity of TIFs is not unjustified. They provide one of the easiest and quickest ways to derive economic funds within a financial setting. Money is derived through the collection of property taxes. Additional revenue is earned from these properties through the belief in economic expansion. If a TIF works properly, the amount of taxes paid by property owners will rise as the improvements called for by the TIF, such as building exterior refurbishment or infrastructure upgrades, boost the value of that property (Podmolik 2000). The increase in taxes pa...
